Wellington City Quarterly economic monitor - December 2019

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Overview

Indicator Wellington City Wellington Region New Zealand
Annual average % change
Gross domestic product
2.7%
2.5%
2.3%
Traffic flow
0%
1.0%
1.7%
Health Enrolments
3.1%
2.5%
2.3%
Consumer spending
3.3%
4.0%
3.3%
Residential consents
36.7%
16.2%
13.8%
Non-residential consents
60.1%
67.4%
5.2%
House prices*
3.7%
9.3%
3.6%
House sales
-1.4%
-1.9%
-1.0%
Tourism expenditure
7.7%
6.9%
3.5%
Car registrations
-5.2%
-6.1%
-8.6%
Commercial vehicle registrations
-16.2%
-14.2%
-6.9%
Jobseeker Support recipients
4.7%
4.4%
10.6%
Level
Unemployment rate
3.4%
3.5%
4.1%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Wellington City

Wellington City’s economic performance continues to mirror national trends with Infometrics’ provisional GDP estimate growing 2.8% in the December 2019 year, next to a national average of 2.3% and a regional average of 2.6%.

Nationally, consumers remain relatively upbeat about the economy and this is reflected in electronic card spending on retail purchases in Wellington city growing 3.3% in the December 2019 year, compared with 4.0% growth across the Wellington region and 3.3% growth nationally.

House sales are stuck at around 3,100 per annum. As a result, house price inflation remains subdued, growing 3.7% in December 2019 which is on a par with 3.6% growth nationally. Residential consents in Wellington City surged 37% in the December 2019 year following an exceptionally strong December 2019 quarter. Non-residential consents in Wellington City also stepped up, rising 60% in the December 2019 year to $459m, which almost matched the unpresented non-residential consent values we saw back in 2017.

Spending by tourists in Wellington City has surpassed $2 billion, increasing 7.7% in the December 2019 year. It’s likely to be a tough year ahead with the Corona virus expected to hit international visitor numbers, although domestic consumers remain relatively upbeat, and the virus could encourage more Kiwis to take their holidays closer to home.

Wellington City’s unemployment rate fell to 3.4% in the December 2019 year, reflecting a fall in the national unemployment rate to 4.1%. However, the number of Jobseeker Support Recipients in Wellington City rose 4.7% in the December 2019 year. Our view is that the government’s more lenient stance towards beneficiaries is encouraging more people to claim Jobseeker Support.

Overview of national economy

The economy looks to have turned a corner, at least temporarily, at the end of 2019. Although growth has slowed, some near-term indicators have shown an improvement. Traffic flows, tourism spending, and house prices have all shown renewed growth, and are set to provide a foundation for further growth in 2020. Government spending activity over the medium term also looks to support economic growth, but there remains little in the way of fundamental growth drivers over the next five years. With economic growth shifting down a gear in recent years, headline growth is likely to settle at a softer level. However, a significant risk to growth in 2020 is presented by the COVID-19 outbreak, which will restrain tourism and export activity, and could threaten consumer and business activity if the outbreak continues or spreads to New Zealand.